Show #14: Bitcoin, Gold and the Cashless Society

[Ennio]

I think that Jason and a caller he was speaking to were right on the money (no pun intended) when they said that Bitcoin was probably the product of a thinktank or group that wants to create wide demand for just such a system.

In the late 90's and early 2000's I was participating on a group list called webcinema. The discussion was mostly focused around the neat new tools of digital video, non-linear editing, quicktime movie files etc. There was a veteran filmmaker on that list who had done a lot of business with big corporations as a consultant and when the conversation turned to Napster (which was then one of THE first peer to peer media sharing applications) this veteran filmmaker said something very interesting. He basically said that although Napster had a visage of being egalitarian and anti-corporate that it was basically the product of big corporations that wanted to condition people to obtain and eventually purchase all their music and movies on-line, digitally. This was years before music / movies became available on places like the Apple Store or Amazon, so I have to wonder if he was right after all.

So, will Bitcoin be to money what Napster seems to be to on-line media purchasing? Could be. The only thing that suggests it may not is that we already have debit and credit cards and people making purchases, on-line and off, with those. Why would they need Bitcoin, or something like it, to exercise more control than what they have? I guess we'll have to wait and see how things turn out.

 

[jonspock]

I think that Jason and a caller he was speaking to were right on the money (no pun intended) when they said that Bitcoin was probably the product of a thinktank or group that wants to create wide demand for just such a system.

So, will Bitcoin be to money what Napster seems to be to on-line media purchasing? Could be. The only thing that suggests it may not is that we already have debit and credit cards and people making purchases, on-line and off, with those. Why would they need Bitcoin, or something like it, to exercise more control than what they have? I guess we'll have to wait and see how things turn out.

Really? I don't see any evidence that Bitcoin was created by a think tank. I don't think the creator really pushed the boundaries of any technologies. It was more a synthesis of existing technologies that had been around a while and hardly out of the realm of one smart creative person.
Until something like Bitcoin is sponsored by a big bank or financial company I don't think it will big enough to be considered mainstream. My bet would be that what was learned by looking at how Bitcoin worked, could be used to develop such a system or alternative currency, but Bitcoin itself it unlikely to survive. The mathematics of Bitcoin make it difficult to be exploited, so I don't really see the motivation any 'group' would have to trade in a system that is already working well for them just to eliminate cash which is already a small percentage of all monetary transactions. In addition there is not a lot of advantages it has for the ordinary person so it's unlikely that people can be herded into it. Napster was great for the average person and it had to be shutdown before it got too big. I cant see that happening with Bitcoin. I've considered trying it myself many times but it never seemed to offer much benefit. Years from now people may look at Bitcoins with the same amusement as we look at Tulip Mania now

 

[Ennio]

I think that Jason and a caller he was speaking to were right on the money (no pun intended) when they said that Bitcoin was probably the product of a thinktank or group that wants to create wide demand for just such a system.

So, will Bitcoin be to money what Napster seems to be to on-line media purchasing? Could be. The only thing that suggests it may not is that we already have debit and credit cards and people making purchases, on-line and off, with those. Why would they need Bitcoin, or something like it, to exercise more control than what they have? I guess we'll have to wait and see how things turn out.

Really? I don't see any evidence that Bitcoin was created by a think tank. I don't think the creator really pushed the boundaries of any technologies. It was more a synthesis of existing technologies that had been around a while and hardly out of the realm of one smart creative person.

The main point I was trying to get across is that Bitcoin could fit the pattern of other "progressive" systems, technologies, movements, etc. that (we usually only come to find out later) was a very well thought out precursor to much larger planned changes. Think 'Laurel Canyon' and the counterculture music of the 60's and 70's, think Gloria Steinem / Women's lib and her affiliations to the CIA, think infiltration of the Black Panthers. The list goes on and on and, quite often, seems like it couldn't possibly be the brainchild of the PTB. Considering how important the exchange of money is in 3d though, I don't think we can discount the possibility.

This is kind of interesting too: http://www.sott.net/article/261533-Patriots-beware-A-march-on-Washington-with-loaded-rifles-is-being-organized-this-coming-Fourth-July-by-good-soldier-Adam-Kokesh

Until something like Bitcoin is sponsored by a big bank or financial company I don't think it will big enough to be considered mainstream. My bet would be that what was learned by looking at how Bitcoin worked, could be used to develop such a system or alternative currency, but Bitcoin itself it unlikely to survive. The mathematics of Bitcoin make it difficult to be exploited, so I don't really see the motivation any 'group' would have to trade in a system that is already working well for them just to eliminate cash which is already a small percentage of all monetary transactions. In addition there is not a lot of advantages it has for the ordinary person so it's unlikely that people can be herded into it. Napster was great for the average person and it had to be shutdown before it got too big. I cant see that happening with Bitcoin. I've considered trying it myself many times but it never seemed to offer much benefit. Years from now people may look at Bitcoins with the same amusement as we look at Tulip Mania now

For all we know, Bitcoin was introduced as a type of experiment precisely to see what works and what doesn't. Who uses it and why.

 

[jonspock]

Agreed the Bitcoin could fit the pattern. However, I think we need to discriminate carefully between what is being controlled and what isn't and not always jump to a conclusion. For me personally, I couldn't see much evidence to back up some others peoples conclusions. Also given that I don't think it has either been wildly successful or will be, I find even less reason to think Bitcoin was setup for any nefarious purposes.

 

[jonspock]

Show #14: Bitcoin, Gold and the Cashless Society

And what about paper money? Do you still use it? Will it soon become a thing of the past? Is a cashless society, where all purchases are made with digital transactions, really on the cards?

Interesting report from US fed (http://www.frbsf.org/publications/federalreserve/annual/2012/2012_Annual_Report_Essay.pdf), wish I saw it before the show (since it contradicts some of my earlier statements), but it answers this question:

The quantity of currency in the economy keeps growing. As Figure 1 shows (on page 8), since the start of the recession in December 2007 and throughout the recovery, the value of U. S. currency in circulation has risen dramatically. It is now fully 42% higher than it was five years ago.

So cash has outpaced GDP and other forms of credit in the last few years! About $1 trillion US FRB Notes in circulation now. About 1-2% of total US money supply as far as I can tell

 

[sitting]

This week we’re taking a look at the recent hits taken by gold and ‘Bitcoin’

Gold bugs have experienced devastation in recent months. Many are still scratching their heads, unclear as to what hit them. The following video gives one of the more cogent explanations I've seen. It's 13:00 into the program. The entire clip has to do with the recent Japanese monetary easing. It's well worth the time. This Japanese QE tsunami has had a global impact...particularly in real estate and equity markets, not to mention precious metals.

BTW George Soros is mentioned in the clip and I just want to say I deem him a repulsive individual.

https://www.youtube.com/watch?feature=player_embedded&v=AR3TyfKTeNE

Taken together with Fukushima, the outlook for this island nation is dim. But when viewed in a cosmic perspective (i.e. what's incoming) none of us look so great either.

 

[jonspock]

This week we’re taking a look at the recent hits taken by gold and ‘Bitcoin’

Gold bugs have experienced devastation in recent months. Many are still scratching their heads, unclear as to what hit them. The following video gives one of the more cogent explanations I've seen. It's 13:00 into the program. The entire clip has to do with the recent Japanese monetary easing. It's well worth the time. This Japanese QE tsunami has had a global impact...particularly in real estate and equity markets, not to mention precious metals.

Thanks for the link & it was worthwhile.
However, I don't see why Gold would fall because of this!
I would really only expect to Japan's actions cause it's own Yen to fall wrt $ or Euro (I just checked after writing this and indeed the dollar hit a 4 year high in terms of Yen). I think saying this would cause Gold to suddenly drop in dollar value while not having any sudden impacts on any equity markets is absurd. Wouldn't it be reasonable to assume Gold would increase in value if there was going to be a big increase in money supply (rhetorical) ?
Also lower interest rates doesn't really hurt people putting money into Gold since the opportunity cost is lowered, so I'd expect that to help Gold too.
Of course always difficult to prove anything like this either way. Looking forward to any other possible explanations

 

[LQB]

Thanks for the link & it was worthwhile.
However, I don't see why Gold would fall because of this!
I would really only expect to Japan's actions cause it's own Yen to fall wrt $ or Euro (I just checked after writing this and indeed the dollar hit a 4 year high in terms of Yen). I think saying this would cause Gold to suddenly drop in dollar value while not having any sudden impacts on any equity markets is absurd. Wouldn't it be reasonable to assume Gold would increase in value if there was going to be a big increase in money supply (rhetorical) ?
Also lower interest rates doesn't really hurt people putting money into Gold since the opportunity cost is lowered, so I'd expect that to help Gold too.
Of course always difficult to prove anything like this either way. Looking forward to any other possible explanations

The correlation regarding gold in the video is just that - correlation but not causation. In fact the timing is interesting considering the smackdown that was accomplished in the paper market (using hundreds of "tons" of paper gold). The powers in the market (Fed/TBTFs) can take gold/silver down to any level they chose at any time - paper is in infinite supply. For this to occur at a time when demand for physical is at an all time high and shortages are beginning to show, indicates that the paper market is still firmly in control. But I think desperation is beginning to show.

 

[sitting]

Also lower interest rates doesn't really hurt people putting money into Gold since the opportunity cost is lowered, so I'd expect that to help Gold too.
Of course always difficult to prove anything like this either way. Looking forward to any other possible explanations

Explanations are a double edge sword. They can give you comfort...while your equity goes down the toilet.

As the lady said in the video, the first objective is capital preservation (assuming one has capital to begin with). FWIW, I've observed over the years, that it's real estate that eventually builds sustained wealth. Not stocks, not bonds, not gold or any other commodities. And if you trade (without an inside edge), you're more than likely to end up in the poor house.

PS By real estate, I mean a conservative, non-highly leveraged accumulation. And you invest when things are shunted...and you get out when things are lusted after. (Gold for instance was highly lusted after just before the break). And since real estate has a less volatile cycle day to day, you avoid the emotional roller coaster. And hopefully make more rational decisions.

 

[Voyageur]

Thanks for the link & it was worthwhile.
However, I don't see why Gold would fall because of this!
I would really only expect to Japan's actions cause it's own Yen to fall wrt $ or Euro (I just checked after writing this and indeed the dollar hit a 4 year high in terms of Yen). I think saying this would cause Gold to suddenly drop in dollar value while not having any sudden impacts on any equity markets is absurd. Wouldn't it be reasonable to assume Gold would increase in value if there was going to be a big increase in money supply (rhetorical) ?
Also lower interest rates doesn't really hurt people putting money into Gold since the opportunity cost is lowered, so I'd expect that to help Gold too.
Of course always difficult to prove anything like this either way. Looking forward to any other possible explanations

The correlation regarding gold in the video is just that - correlation but not causation. In fact the timing is interesting considering the smackdown that was accomplished in the paper market (using hundreds of "tons" of paper gold). The powers in the market (Fed/TBTFs) can take gold/silver down to any level they chose at any time - paper is in infinite supply. For this to occur at a time when demand for physical is at an all time high and shortages are beginning to show, indicates that the paper market is still firmly in control. But I think desperation is beginning to show.

I watched LQB from the link you posted about "Freegold" (so i'm just thinking about this aspect) and the cyclical historical nature of transitions between "savers" and "debtors". It seems to me, with Japan, the US, and a new head coming to the Bank of England (all supporting a debtor society by printing paper), somehow it does not seem reasonable that they just don't know this cyclical transition inevitability. So perhaps they are well aware and are perpetuating it for as long as possible (for others), and for that they need to print and print, until such a time when physical gold (and other worthwhile metals) are largely in the right hands (theirs) just before the conversion. This also involves the wrong types of "savers" (to them) having been liquidated to a larger degree, at which point they will then stop printing. After a painful conversion for the masses, as the top "savers" buy up at pennies on the dollar global land assets et al, they again will move back to supporting "debtors". However, this time it will be in the form of a cashless debt economy. As the "savers", in your links scenario could possibly suggest especially during our present times, they too have largely taken a big hit the world over and the "savers" are much more consolidated in fewer hands, especially if the lessor "savors" very own investments and bank accounts can now be accessed and pruned willy nilly, so to speak.

The "main "savers" who own the financial system "debtor" infrastructures, seem to always gravitate to domination with their usurious manipulative systems and once further mass buy-up is accomplished, "debtor" statuesque would be returned with a new cashless face and hegemonic control would become much more widespread.

So just my thoughts on the link you provided and how that could work itself back in to a cashless society.

 

[LQB]

I watched LQB from the link you posted about "Freegold" (so i'm just thinking about this aspect) and the cyclical historical nature of transitions between "savers" and "debtors". It seems to me, with Japan, the US, and a new head coming to the Bank of England (all supporting a debtor society by printing paper), somehow it does not seem reasonable that they just don't know this cyclical transition inevitability. So perhaps they are well aware and are perpetuating it for as long as possible (for others), and for that they need to print and print, until such a time when physical gold (and other worthwhile metals) are largely in the right hands (theirs) just before the conversion. This also involves the wrong types of "savers" (to them) having been liquidated to a larger degree, at which point they will then stop printing. After a painful conversion for the masses, as the top "savers" buy up at pennies on the dollar global land assets et al, they again will move back to supporting "debtors". However, this time it will be in the form of a cashless debt economy. As the "savers", in your links scenario could possibly suggest especially during our present times, they too have largely taken a big hit the world over and the "savers" are much more consolidated in fewer hands, especially if the lessor "savors" very own investments and bank accounts can now be accessed and pruned willy nilly, so to speak.

The "main "savers" who own the financial system "debtor" infrastructures, seem to always gravitate to domination with their usurious manipulative systems and once further mass buy-up is accomplished, "debtor" statuesque would be returned with a new cashless face and hegemonic control would become much more widespread.

So just my thoughts on the link you provided and how that could work itself back in to a cashless society.

Oh yes - who knows what will actually happen with time? There are many "Freegolders" that believe it is just a matter of time before Freegold transitions back to a debt system by changing the rules (eventually) regarding the leasing/renting/borrowing of gold (then you are back to paper gold). But these same Freegolders are confident that the transition to Freegold will take place since it is the only way out of a collapsing (worldwide) debt system.

Going cashless for the masses could also be accomplished (post-Freegold) by outlawing private gold ownership - so that Freegold only works for the Elite/Giants. But if you look at China/India where massive amounts of gold are in private/individual hands - this is not something that can be accomplished overnight. Even in the US/Canada, the mints are being cleared out regularly at record levels and new bullion is backlogged badly. So, unless the PTB has figured out how to turn massive amounts of lead (or tungsten) into gold, I think the end is near.

And keep in mind that the FOFOA video barely scratches the surface of what Freegold is and what is driving its transition.

 

[LQB]

Yesterday Jim Sinclair (jsmineset.com) puplished a portion of FOFOA's writings to support his position that transition to Freegold is happening now:

Freegold – Preferable to a gold standard?
Author FOFOA

When people bring up going back to a gold standard, many – including the hard money advocates – want to return to a gold standard because of the disciplinary function of gold within the monetary system. Physical gold has proven a very good instrument against government debasement in the monetary system. However, what the gold standard advocates overlook, is the actual effectiveness of the gold as money, and the way to get to a gold standard.

Apart from gold being a cumbersome medium of exchange, gold – when in the hands of governments and central banks – has never proven to be a hedge against … that same government and central banks. For obvious reasons I might add, anyone should see the conflicting roles of "our" officials. Physical gold can only be a hedge against government and central banks when it is in private hands. Physical has a special meaning here too, as non-physical "paper" gold is just an IOU with counter-party risk, which might not function as a hedge, when push comes to shove.

Perhaps more importantly, actually getting to a gold standard will proof the most difficult goal for the hard money advocates. A gold standard is in every way the extreme opposite site of where we are standing today. You literally have to get rid of overspending governments, central banks backstopping everyone and everything, and the majority part of the global population addicted to cheap money.

Wouldn’t it be much easier to accomplish the same goal "bringing back the disciplinary function of gold to the monetary system", by leaving the ruling establishment in power, by leaving the current financial system in place? Everyone who likes to solve this global economic crisis, should answer this question with a definitive "yes". If it can be done without throwing the world into chaos because of changing monetary system, that should be the preferred route to a solution. So, how can this be done? Get physical gold to private hands …. this time for good.

Store of value to private hands

The idea is simple, and it has been this way from the very early days of money. Money is just a means to do transactions, to exchange, which we refer to as the function "medium of exchange" within money. Whenever a transaction is closed, the medium "money" has no longer a function. Economists are now expected to be jumping up and down, screaming "store of value" and "unit of account". Well you see, the unit of account doesn’t really need a medium. The prices on the counter of a shop, are just a communication method, to allow us to have a perception, whether something to be cheap, reasonable priced, or expensive. For that communication, you don’t need the actual medium "money". (Note that this is true in a digital world anyway – you can’t hold the money in your hands for it is an electronic abstraction in ones and zero’s.) For store of value, we have been taught that this is one aspect of money, but it is certainly not an aspect of current day government issued currency. The truth is, anything can be a store of value, from farm land, real estate, stocks in well run companies, to gold and silver or private issued money. All of them have characteristics of store of value, one better than the other. And government issued money is not one of them.

By cutting the "store of value" out of the function money, we could allow central banks to print all the money they need, without seriously impacting the purchasing power of savers. That is, for future spending savers are not setting aside their purchasing power in the form of currency, and currency derivatives (which includes government bonds). Consequently, without a pool of savings stored in currency and currency derivatives, debasing the money supply to surreptitiously devalue government obligations doesn’t work. There you have it: removing the function "store of value" from money is seriously disciplining the current day reckless borrowers, ranging from banks through fractional reserve banking, to central banks bailing out everyone and everything, to socialist governments spending the future tax revenue from unborn generations.

Freegold

Traditionally, the best medium to store value long term has been physical gold. When physical gold was captured as function into the official money, governments had an incentive to demonize gold, to make it a barbarous relic of the past. Part of this strategy, is the depression of the gold price. Either through direct manipulation in the paper gold markets, or marketing propaganda. Up till today, people are discouraged to store their surplus of purchasing power in physical gold, but to rely on currency and currency derivatives, being "as good as gold".

By removing the function "store of value" from money, we can allow physical gold to discipline our money, while keeping our monetary system intact, keeping governments and central banks in place, and avoiding economic turmoil or social unrest. That is what freegold is all about, gold finally set free!

 

[Al Today]

There has been much said on this subject of money. Personally, I think this plan has been in action for some time. An example of potential plan is an observation I have spoken for years:

Years ago, U.S. currency was based upon gold.
Left the gold standard and then moved on to the value of silver.
Now upon the paper is written "In God We Trust".

 

[LQB]

Years ago, U.S. currency was based upon gold.
Left the gold standard and then moved on to the value of silver.
Now upon the paper is written "In God We Trust".

Thanks Al - I love it!

 

[LQB]

And here is a recent piece from Paul Craig Roberts:

Gangster State America — Paul Craig Roberts
May 13, 2013

There are many signs of gangster state America. One is the collusion between federal authorities and banksters in a criminal conspiracy to rig the markets for gold and silver.

My explanation that the sudden appearance of an unprecedented 400 ton short sale of gold on the COMEX in April was a manipulation designed to protect the dollar from the Federal Reserve’s quantitative easing policy has found acceptance among gold investors and hedge fund managers.

The sale was a naked short. The seller had no gold to sell. COMEX reported having gold only equal to about half of the short sale in its vaults, and not all of that was available for delivery. No one but the Federal Reserve could have placed such an order, and the order came from one of the Fed’s bullion banks, one of the entities “too big to fail.”

Bill Kaye of the Greater Asian Hedge Fund in Hong Kong and Dave Kranzler of Golden Returns Capital have filled in the details of how the manipulation worked. Being sophisticated investors of many years of experience, both Kaye and Kranzler understand that the financial press runs with the authorized story planted to serve the agenda that has been put into play.

Institutional investors who have bullion in their portfolio do not want the expense associated with storing it securely. Instead, they buy into Exchange Traded Funds (ETF) and hold their bullion in the form of a paper claim. The largest, the SPDR Gold Trust or GLD, trades on the New York Stock Exchange. The trustee and custodian is a bankster, and only other banksters are able to turn investments into delivery of physical bullion. Only shares in the amount of 100,000 can be redeemed in gold.

The price of bullion is not set in the physical market where individuals take delivery of bullion purchases. It is set in the paper futures market where short selling can drive down the price even if the demand for physical possession is rising. The paper gold market is also the market in which people speculate and leverage their positions, place stop-loss orders, and are subject to margin calls.

When the enormous naked shorts hit the COMEX, stop-loss orders were triggered adding to the sales, and margin calls forced more sales. Investors who were not in on the manipulation lost a lot of money.

The sales of GLD shares are accumulated by the banksters in 100,000 lots and presented to GLD for redemption in gold acquired at the driven down price.

The short sale is leveraged by the stop-loss triggers and margin calls, and results in a profit for the banksters who placed the short sell order. The banksters then profit again as they sell the released gold into the physical market, especially in Asia, where demand has been stimulated by the sharp drop in bullion price and by the loss of confidence in fiat currency. Asian prices are usually at a higher premium above the spot prices in New York-London.

Some readers have said “don’t bet against the Federal Reserve; the manipulation can go on forever.” But can it? As the ETFs such as GLD are drained of gold, their ability to cover any of their obligations to investors diminishes. In my opinion, these ETFs are like a fractional reserve banking system. The claims on gold exceed the amount of gold in the trusts. When the ETFs are looted of their gold by the banksters, the gold price will explode, as the claims on gold will greatly exceed the supply.

Kranzler reports that the current June futures contracts are 12.5 times the amount of deliverable gold. If more than 8 percent of these trades were to demand delivery, COMEX would default. That such a situation is possible indicates the total failure of federal financial regulation.

What the Federal Reserve has done in order to maintain its short-run policy of protecting the “banks too big too fail” is to make the inevitable reckoning more costly for the US economy.

Another irony is the benefactors of the banksters sale of the gold leeched from the gold ETFs. Asia is the beneficiary, especially India and China. The “get out of gold line” of the US financial press enables China to unload its excess supply of dollars, accumulated from the offshored US economy, into the gold market at a suppressed price of gold.

Kranzler points out that not only does the Fed’s manipulation permit Asia to offload US dollars for gold at low prices, but the obvious lack of confidence in the dollar that the manipulation demonstrates has caused wealthy European families to demand delivery of their gold holdings at bullion banks (the bullion banks are essentially the “banks too big to fail”). Kranzler notes that since January 1, more than 400 tons of gold have been drained from COMEX and gold ETF holdings in order to satisfy world demand for physical possession of bullion.

Again we see that institutions of the US government are acting 100% against the interests of US citizens. Just who does the US government represent?